The report A Better Off Britain, launched at the CBI's annual conference in London, proposes increasing the threshold at which employees start making national insurance contributions to £10,500 by 2020/21. The current figure is £7,956.
It also suggests extending maternity pay from 39 to 52 weeks to bridge the gap between pay for young mothers and the time at which childcare becomes available.
For childcare itself, the free weekly provision of 15 hours per week would be extended to children between one and two-years-old. Currently it is only available for children aged between three and four.
Other recommendations in the report include ways to increase productivity to support higher pay, defining clearer routes into high-skilled work and measures to ensure pupils don't fall behind at school.
CBI director-general John Cridland predicted that although living standards are set to increase slowly in the future, financial growth itself will not be a "miracle cure".
“The UK needs to face up to some real long-term challenges," he said. "Changing skills needs, greater global competition and low social mobility mean for many the pathway to a better life is tough and far from clear.
“But the answers do not lie in short-term sticking plaster fixes, like intervening in pay or attacking the UK’s flexible labour market, which will ultimately cost jobs. Instead, we need to invest in productivity, skills and education to make the best of Britain’s talents."
